Salary Caps and the continued dominance of LeBron James
What have we learnt from the 2nd round of the 2016/17 NBA Playoffs? If anything, it is that nothing, absolutely nothing beats LeBron James.
30 is the age at which most men settle down into the monotony of life, understanding that their bodies no longer work the way they used to as teenagers. Hangovers hurt a lot more, gyms mean a lot less and life just gets slower as you wind down the road to retirement.
As it turns out, no one delivered that message to LeBron James. At the age of 32, fourteen years into his stint as a professional basketball player, LeBron just had the best career year of his life, statistically speaking, and rather frighteningly, he’s showing no signs of slowing down.
At the time of writing this, the Cavaliers have just finished their sweep of the new and improved Toronto Raptors in the semi-finals of the Eastern Conference, led by LeBron himself. His stats, listed below, are simply mind-boggling.
This is not only LeBron’s 7th consecutive trip to the Eastern Conference Finals, it is also an NBA record 11th sweep for the ex-Heat, moving further past now-retired Tim Duncan, who had 9.
This makes the Cavaliers the first team ever to start 8-0 in the playoffs for two consecutive years and the game 4 victory against the Raptors was the 11th straight victory for the Cavaliers in the Playoffs, since they came back from a 3-1 deficit to beat the Golden State Warriors in the Finals last year.
Keeping in mind LeBron’s age and the number of minutes he’s played in comparison to his peers (LeBron has played more minutes in 14 years than Michael Jordan played in his entire career), here are his total scores over the past 8 games of the 2017 Playoffs – 32-13-6, 25-7-10, 41-12-13, 33-4-10, 35-4-10, 39-4-6, 35-7-8 and 35-9-6, which averages out to 34-7-8.
These numbers don’t just reflect box score dominance; he’s historically efficient. During the 2017 Playoffs, LeBron has been an unholy mixture of Shaquille O’Neal and Stephen Curry, shooting better than Shaq did in his best year (66% vs. 62% in the paint) and better than Curry in his best year (47% vs 46% from the 3-Point Line).
Let’s also remember that these aren’t particularly easy teams that LeBron has gone up against; the Raptors won 51 games and added big man, shot blocker Serge Ibaka halfway through the season in the hopes of thwarting LeBron during the playoffs while the 42 win Pacers picked up noted anti-LeBron maestro Lance Stephenson from free agency and put him on James for 4 straight games.
Are the Raptors the NBA’s dinosaurs?
At this point, if you’re the GM of the Raptors (Masai Ujiri) you really need to ask yourself what can you possibly do next year in order to beat the Cavaliers, who will spend a full week resting before going up against the winner of the Celtics vs. Wizards matchup.
Star point guard Kyle Lowry and Serge Ibaka become free agents this summer and the former is most likely to be re-signed. Lowry will command an estimated salary of $35 million a year, increasing 7.5% every year, on a five-year deal adding up to a mind-boggling $200 million bill for the Raps (courtesy of the new salary cap which I’ll explain in detail below). While Masai can go over the limit and sign Ibaka as well, and as a result inherit the luxury, the question is, should he?
EDIT: This article stating how Toronto Raptors GM Masai Ujiri was unlikely to re-sign an aging Kyle Lowry for a max contract based on the current cap space of the Raptors, went up on Sportskeeda at approximately 6 pm IST. Promptly after their second straight disappointing play off performance, at 10 pm IST, Marc Stein of ESPN confirmed that Kyle Lowrly will indeed opt out of his contract to become a free agent, no doubt after talking to Masai about his future in Toronto.
‘Explain like I’m 5’ time
Before we get to that, we must first understand a few basics of how salaries work in the NBA. The Holy Grail for salary related information for the NBA is the CBA, or the Collective Bargaining Agreement, which is basically the blueprint for how salaries work in the NBA, to keep the league as fair and level as possible for all the teams.
Now, all teams are assigned a “salary cap” decided by the NBA, which is the total amount of money that a team is allowed to spend on salaries for their players, irrespective of the team's standing. This means that even the top rated Golden State Warriors who bring in a massive chunk of the revenue for the NBA, can spend the same amount on players as the Sacramento Kings, who haven’t made the Playoffs for the past 11 years and will probably go another decade before making it again.
This creates a level playing field for all the teams in the league, irrespective of standings or viewership, which helps smaller market teams be competitive.
The salary cap varies every year and because of a new television deal with ESPN and Turner Sports, which will see ESPN pay the NBA $2.6 billion annually for the next nine years in exchange for broadcasting rights, the salary cap has risen from $70 million in the 15-16 season to $102 million next year.
If a team goes over the salary cap, they pay what is called a “luxury tax”, which is a financial deterrent to dissuade the development of “super teams” by signing multiple top level players. Depending on how much a team is beyond the salary cap, they’re charged with a tax that ranges from $1.50 of every $1 over the salary cap, to $3.75 for every $1 over.
So, if a team is spending $106 million on salaries as opposed to the salary cap of $102 million, they pay a tax of $6 million (The tax is $1.50 of every $1 over the salary cap, for being $4 million over, they pay [$4 million * 1.5] = $6 million.)
If teams are over the tax limit for three of their previous four seasons, they pay a ‘repeat offender’ tax at which point they pay even more per $1. Below is a table depicting how the luxury tax works, depending on how much over the salary cap limit the team is.
Amount over tax threshold | Standard tax per excess dollar | Repeat offender tax per excess dollar |
$4,999,999 or less | $1.50 | $2.50 |
$5 million to $9,999,999 | $1.75 | $2.75 |
$10 million to $14,999,999 | $2.50 | $3.50 |
$15 million to $19,999,999 | $3.25 | $4.25 |
Over $20 million | $3.75 + $0.50 per $5 million | $4.75 + $0.50 per $5 million |
All this may seem a million miles away from putting a basketball in a hoop, but the NBA is fundamentally a business and the primary objective of a business is to make money. Owners are unlikely to want to spend any more money than they’d make and being taxed is an additional financial burden.
With all this in mind, it’s time to face the harsh truth which is that the Raptors are going to play second or third fiddle to the Cavaliers for as long as LeBron James remains in the Eastern Conference. Going over the limit (Kyle Lowry’s salary alone will be 35% of the salary cap) reduces the Raptors’ ability to sign free agents over the coming years when they might have more of a chance to be a force in the league.
What if you’re actually winning though?
The Golden State Warriors, who have been just as dominant as the Cavaliers in the Playoffs, have a similar issue. Three keys pieces in their cog, Stephen Curry, Kevin Durant and Andre Iguodala, along with backup point guard Shaun Livingston are going to become free agents this year.
Curry’s contract is something of a Front-Office miracle, he signed his last contract (Four Year, $44 million, i.e. $12 million a year) with the Warriors back in October 2013, when he was coming off a string of injuries and wasn’t considered in the same talent pool as he is today (Two Time MVP and NBA Champion along with the unofficial title of the Greatest Shooter Ever).
Next year though, Steph will go from one of the least paid players in the league, to one of the highest paid, his max contract being valued at $207 million, almost tripling his annual salary to $36 million a year, making it the most expensive contract in league history.
Oddly enough, Curry can thank his new teammate, Durant, as the reason for his contract. Unless you are living under a rock, you know that in a highly criticised move, Durant moved from the Oklahoma City Thunder to join their Western Conference rivals, Golden State Warriors. One of the reasons this was hypothesised to have happened, is because OKC couldn’t offer Durant a lucrative enough deal to stay with his home team, thus allowing GSW to pick him from the market on a short-term contract.
The result of this was a new type of contract that the NBA and NBA Players Association developed together in order to create an incentive for players to stay with their original teams, allowing teams to keep their star players for far beyond what other teams can offer without going over the salary limit and getting hit with the luxury tax.
For example, if a team wants to sign Steph Curry this year, they can only offer him $135 million over the next four years, giving Curry about 70 million reasons to stay with the Warriors. The lack of this rule has allowed many high-profile signings, including LeBron James and Chris Bosh of the Miami Heat in 2010 to create their own Championship-winning super team.
The financial issues for the Warriors arise when Durant’s contract comes into play, as the ex-Thunder has the option to re-sign and is also viable for a $36 million a year max contract, making Steph and him the highest paid teammates in NBA history (together, they will control an unprecedented 70% of the Warriors’ annual cap space).
Since Durant has only been with the Warriors for a year, they will have to go over the salary limit, unless the 28-year-old takes a salary cut. If he doesn’t, then the Warriors will have trouble keeping not only their four-player core of Curry, Klay Thompson, Draymond Green and Durant together, but will also face issues in their attempts to sign their non-star players like free agents Iguodala and Livingston.
However, for the Warriors, this is nothing a 2017 Championship Ring can’t fix.